Thomson Reuters is no longer trying to be a diversified information conglomerate. The Toronto-controlled professional franchise is converting a century of legal and tax content into what management calls fiduciary-grade artificial intelligence, then selling the print factory that used to carry that content. The second-quarter print confirmed that the Big Three customer groups can grow organically at a double-digit rate while Global Print keeps shrinking. The equity has already been marked down from the prior-year peak, so the debate is no longer whether the franchise compounds. It is whether CoCounsel and the in-house language model monetize fast enough to justify a software multiple after that de-rating.
Legal Professionals and Corporates each posted organic growth of 10 percent. Combined with tax and accounting they now account for most of company revenue. Adjusted earnings before interest, taxes, depreciation and amortization, the company's preferred operating profit measure, expanded only modestly at the margin line. Recurring subscriptions still dominate the mix. The cash conversion is what funds the dividend increase, the completed repurchase program, and the special distribution that retired shares in May. That is a high-quality compounding engine. It is not yet proof that artificial intelligence is lifting price realization rather than just defending the installed base against generic models.
Second-quarter revenue rose and free cash flow rose faster than profit. Organic growth at the company level reached 8 percent, and management lifted the full-year organic outlook to match that run rate. The KKR joint venture for Global Print is signed, with closing targeted for the fourth quarter, subject to regulatory approvals. The question the next several quarters resolve is simple. Does Westlaw-plus-CoCounsel keep the Big Three at the newly raised growth band once print leaves the reported mix, or does the multiple stay compressed because customers treat generic agents as good enough?